Indonesia Rupiah Outlook
Indonesia Rupiah Outlook
Indonesia’s trade balance in January 2013 was at a deficit of US$ 171 million, the consequence of import demand exceeding exports, which resulted in an increasing need for US dollars on the market.
Investors are concerned the rupiah depreciation will persist as the market dollar demand grows compared to foreign exchange gains from exports. This condition may lead to speculation the US dollar will continue to strengthen in the domestic money market; suppressing the rupiah further.
Fundamentally, the rupiah is actually strengthening thanks to Indonesia’s strong growing economy amid the global crises. In financial markets, foreign investors continue to invest in Indonesias stock market. “But the slow global economic recovery is making it difficult to create new positive catalysts for the rupiah,” Lana opined.
This week, the rupiah is expected to weaken with a lower limit of Rp 9,705 per US dollar. Bank Indonesia is likely to intervene in the money market rather than raising its benchmark interest rate (the BI Rate) from the current level of 5.75 percent.
Last week, the rupiah closed at Rp 9,674 rupiah per US dollar, edging up 0.36 percent from the previous week’s Rp 9,709 per U.S. dollar.
Interested in Asian FX? Shayne Heffernan Ph.D. Economist/Hedge Fund Manager is now managing accounts at Citibank FX Singapore on behalf of Indonesian Investors, click here to find out more.
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Shayne Heffernan oversees the management of funds for institutions and high net worth individuals. He is also an active consultant working with Corporations around the World.
He is recognized as one of the leading Economists in South East Asia, as well as the preeminent authority on ASEAN. His opinions and forecasts are widely read by decision makers in the region and Internationally.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.
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